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The war on file sharing hits Australia

Cover the windows, stay indoors and bunker down — the war on file sharing has reached Australian shores. Copyright owners have a fair claim to their content, but is it fair to saddle ISPs with the responsibility of policing their users? And should copyright enforcers be able to steal our privacy?
Written by Jacquelyn Holt, Contributor

feature Cover the windows, stay indoors and bunker down — the war on file sharing has reached Australian shores. Copyright owners have a fair claim to their content, but is it fair to saddle internet service providers (ISPs) with the responsibility of policing their users? And just as file sharers are stealing copyrighted content, should copyright enforcers be able to steal our privacy?

The current legal case between Australia's third largest ISP, iiNet, and Hollywood studio copyright representative, Australian Federation Against Copyright Theft (AFACT), brings these issues to the fore. Under the auspices of AFACT, Hollywood studios, including Walt Disney Studios, Universal Films, Paramount Pictures and Twentieth Century Fox, decided to sue iiNet late last year. The companies allege iiNet did nothing to help the studios enforce their copyright — a key requirement to be eligible for Safe Harbour provisions under the 2006 amended Copyright Act.

AFACT's incessant delivery of notification letters to iiNet sparked a war of attrition between the opposing sides. On the one side, AFACT bombarded iiNet with literally tens of thousands of notifications, while iiNet prohibited its ISP subsidiary, Westnet, from continuing its policy to forward notifications to customers. With the trial ending and the verdict months away, is the war on file sharing over or just beginning?

Sydney Birchall, senior lawyer at Optim Legal, believes Australia could well be facing a new frontline on the war on file sharing. "I think it would be reasonable to believe that ISPs would become a wider target and in that sense it would be a new direction in copyright enforcement," he says.

File sharing is becoming a socially acceptable way to access content. David Crafti, president of the recently launched Pirate Party political group, contends that traditional modes of media consumption are outdated. "Most Australians do not consider the non-commercial sharing of media to be immoral and that non-commercial copying actually helps artists by allowing them to reach a wider audience." AFACT and the 36 applicants it represents disagree.

But where does iiNet fit into this? Some argue that the ISP has been drafted into the war on file sharing. Michael Malone, iiNet's managing director and metaphorical draft dodger, says that it's not the ISP's job to act as "judge, jury and executioner". But as we are seeing in other countries, ISPs are becoming forced to take responsibility for their users' actions.

Birchall believes internet service providers have been wary of this for years. Having already targeted file sharing programs and individual infringers, the involvement of ISPs is being explored as an avenue for greater copyright enforcement. "Major corporate copyright owners have been targeting a range of parties over a period of years. The key first target was the distributors of software that was predominantly used for illegal music file sharing, eg, Napster, Grokster and Kazaa. This was fairly successful but didn't solve the problem," he says.

After that, he says, "copyright owners went after individual infringers, primarily in the US. This has not been as successful, especially in the court of public opinion... The next logical choice is the ISPs, who have been nervous about their legal position in Australia for years."

The rise of digital piracy

Digital piracy has become a normalised social activity. Initial file sharers from the Napster generation capitalised on both the "all information should be free" mantra of the internet and the rights linked to sharing legally bought videos or music. In a digital age, that notion has exploded to encompass entire industries, presenting challenges to both copyright law and the economic foundations of these industries. Some view this as an unavoidable effect of the digital era, one that is part of the ongoing evolution of media and consumption patterns.

The majority of younger people share creative products in ways that frighten the dinosaurs.

University of Sydney lecturer Dr Tim Dwyer

Dr Tim Dwyer, lecturer at the University of Sydney and author of several books exploring the impact of the internet on traditional media, believes file sharing is symptomatic of a shifting relationship between traditional media and internet users. "Media industries are evolving and they'll take a long time to find the right balance (innovation, creativity, audience usage on the one hand, and profits of those who labour in these industries)," he says.

Dwyer argues that file-sharing sites should not be shut down, but rather be better understood and capitalised upon: "The majority of younger people share creative products in ways that frighten the dinosaurs. It is incumbent on the business players in the industry to find ways to make profits, and allow societal creativity/innovation to continue in sustainable ways."

Others, like Birchall, argue that regulation is needed in light of the file-sharing mentality that "all information should be free". Should that mentality change, he believes regulation would be unnecessary, but current attitudes make it imperative. "The economic model that copyright is designed around simply cannot function in a context of rampant and unrestrained piracy ... online regulation may not work perfectly, but it is a lot better than nothing so long as we stick with the fundamentals of piracy."

BitTorrent has been identified as the biggest source of illegally downloaded content, accounting for the majority of all peer-to-peer interactions. While overall peer-to-peer file sharing has declined over the past year, streaming is on the rise. Digital pirates are becoming sneakier, more flexible and more impatient, preferring to stream their illegal content (accessing content temporarily rather than for keeps).

According to a survey by the Pew Research Centre, traffic to video streaming sites has doubled since 2006, from 33 per cent to 60 per cent. Of these percentages, daily visits to the site are up from 8 per cent to 19 per cent. While these statistics include both legal and illegal streaming, over 30 per cent of US internet users have used streaming sites to access illegal content.

Next page: ISPs face the long arm of the law

ISPs face the strong arm of the law

The iiNet versus AFACT trial reflects the ongoing struggles between copyright holders and file sharers, but adds ISPs into the mix. The issues over whether ISPs should be held accountable for their users' actions come to the fore in this trial, with the judge's verdict having serious implications for both the internet service providers and the industry regulatory structures within Australia.

Should AFACT win the case, Birchall says, "AFACT's success could also lead to a review of ISP exposure and legislative changes as a result". Birchall is also supportive of the involvement of ISPs in copyright enforcement. "It might be appropriate for ISPs to play a leading role in online copyright enforcement if it is the case that, from a practical perspective, ISPs are by far the best placed entity to do so. However, if this is the case, there is an argument that ISPs should receive appropriate compensation from copyright owners for acting as a watchdog over those owners' rights," he says.

Governments are joining the fight against digital piracy with debates taking place in America, France, the UK and Australia, questioning the role of ISPs in the war on file sharing. This is putting pressure on ISPs, as well as creating potential implications for their users' privacy.

Last month, the French Constitutional Council amended the Creation and Internet law for the second time. The law was first instituted in May of this year, but was overturned by the council on the basis that it didn't include provisions for a judge's approval before internet suspension. The council equated internet access with the protection of liberty rights established during the French Revolution. However, the French court then overturned its overturning of the law to re-establish the three-strike rule for digital pirates. The first warning letters are expected to be sent as early as January 2010.

The French law introduces the strictest file-sharing measures; though unlike moves in Australia and the UK, this will create a new agency to deal with the prosecuting of digital pirates.

In the UK, the government is taking a similar, but more decisive, approach with the Digital Economy Bill by proposing a new anti-file sharing law to be established by 2010 at the latest. If passed, ISPs will face new responsibilities to reduce file sharing, requiring them to send email warnings to infringers and pass on IP addresses of serial infringers to rights holders. Sound familiar?

Parties can win or lose certain 'battles' and it may not be entirely clear who actually won the 'war'.

Optim Legal senior lawyer Sydney Birchall

In Australia, similar steps are being taken in the war on file sharing. In July, the Federal Government released a report on the digital economy, proposing a similar "three-strike" rule against copyright infringers, using ISPs to track and punish those caught. The report stated: "One solution proposed by copyright owners is a 'three strikes' or 'graduated response' proposal under which copyright owners would work together with ISPs to identify the ISP's customers who are suspected of unauthorised file sharing and the ISP would then send a notice on behalf of the copyright owner to that customer advising of this allegation."

With the iiNet versus AFACT case, the verdict may work to make the government's plans a possibility, despite its unpopularity with the public. The report acknowledged these dissenting views, stating: "Several submissions were received which opposed this proposal for reasons including the lack of judicial oversight of administering sanctions based on private allegations, the lack of public transparency about the process and concern over consumer rights."

The 1968 Copyright Act presents the biggest site of contest for the two parties. Section 39B provides a defence for iiNet stating: "a person (including a carrier or carriage service provider) who provides facilities for making, or facilitating the making of, a communication is not taken to have authorised any infringement of copyright in a work merely because another person uses the facilities so provided to do something the right to do which is included in the copyright."

However, Section 36 of the Copyright Act is the main area of contention for the trial, which states: "the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorises the doing in Australia of, any act comprised in the copyright."

Both sides rely on case law to determine whether iiNet can be held liable for authorising copyright infringement. AFACT is using the case law established by UNSW v Moorehouse and APRA v Morris to correlate the ISP's actions as equating to authorisation. iiNet is, of course, disputing these claims, relying on the decision of the High Court of Australia in the Adelaide Corporation v APRA to establish no authorisation was provided.

Should iiNet be found liable for its users' online actions, this could allow AFACT to force iiNet to act upon its infringement notices, and pave the way for other ISPs to face the same actions. This would then become a landmark case that would lead the way to significant changes in the role ISPs play in copyright enforcement.

While we wait for Judge Cowdroy's verdict, the war on file sharing is nowhere near over. As Birchall suggests, "parties can win or lose certain 'battles' and it may not be entirely clear who actually won the 'war'."

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